How to choose a credit cards terminalIf you want to learn the nuts and bolds about leasing or purchasing your transaction terminal, you can read below an insightful article courtesy of Cardservice International. This internet transaction company will enable you to accept all major credit cards and this will greatly help you to expand your customer base and increase your cash flow. You'll find several merchant account options that let you multiply your sales by accepting credit cards, ATM/debit cards and checks. If you apply online today, your $195 application and setup fee are free. For more information about leasing or purchasing your credit cards terminal read the following article: Are you thinking of leasing a credit cards terminal printer, or credit card processing software?Do not jump to the conclusion that leasing is better then buying just because you do not have to come up with all the money for the purchase price up front. Do not assume that leasing is a big ripoff either. The decision to lease or buy deserves greater thought then a snap decision and can save you considerable money. Leasing companies will typically require at minimum the first month's lease payment instead of an outright purchase. As example, you could be choosing between paying $695.00 up front for a terminal/software or making a first month's lease payment of $39.95.
The lease payments however might last 36 to 48 months resulting in an effective interest rate of greater then 20% per year borrowing cost. Be aware that· leases don't have interest rates but "factors". Convert your payment stream obligation to an annual interest rate. If you need help doing this then call or e-mail me and I will be happy to do it for you as a courtesy. In my opinion, this is a clear financial decision. Try to keep your emotions out of it. Although the effective interest rate is high on the lease remember that the leasing company is taking the risk of the default and you are joining a pool of lessees who are typically higher risk. Remember, most business owners lease when money is tight and this increases the risk of default to the leasing companies. That said, here are some things to think about in the decision making process. Try to purchase the equipment or software outright but only if you have readily available funds, or if you have plenty of credit available - even credit on a credit card if necessary. The effective percentage rate of the lease usually exceeds twenty percent annual interest. This is expensive. If you have the money, or even can borrow the money, then buying up front could also give you the power of possibly negotiating the purchase price of the equipment or software. However, if money is tight or your ability to borrow the sums necessary to purchase the credit cards terminal or software outright is limited then leasing may make the most sense. Using the above example, and again assuming money is tight, by purchasing you are tying up $695.00 which could be used to invest in your business. Investing an extra $695.00 made available by leasing your credit card equipment or software rather then purchasing can return far greater then 20% annual return. For example, let's say you invest $695.00 in a better Web site then you could afford without the $695.00 and this results in getting an extra $210.00 PER YEAR in profit. Well, you are making the right decision because the $210.00 per year is giving you a better then 30% annual return on your investment which is greater then the 20% cost of the lease. The decision to borrow money at 20% annual interest and re-invest it at 30% annual interest makes sense all day long don't you think? Run your own numbers on your business. Be very conservative on the annual return you will get from what you choose to spend the $695.00 on. I think you will find that if money is tight it is very easy to find an investment for your $695.00 that more then offsets the annual interest expense of leasing. In addition, if you are leasing credit cards terminal or software to provide your business with the ability to accept credit and debit cards then the decision becomes fairly easy either way. Run the numbers on an up front investment of $695.00 OR a lease. Factor in the additional profit from just a few extra sales each month that you would not have unless you accepted credit cards. Be very conservative in your estimates. Subtract your monthly investment to accept credit cards from the extra profit. In most cases the net profit after accounting for the upfront investment and the ongoing monthly investment even with a lease payment clearly provides a greater return on investment whether you purchase OR lease. There are two other advantages to leasing to be aware of and may factor in your decision making process. Your accountant will probably tell you that the lease payment is 100% deductible for the full amount of the payments you made that year which will lower your tax liability. On the other hand, when you purchase outright you may not be able to deduct the entire amount of the purchase that year. This is true because even though you paid for the equipment or software up front the investment may be "depreciated" over some years. Even thought the lease is a financing tool you may not have to list the lease as a liability for your remaining payments. This is an advantage to check on with your accountant but if you purchase the equipment or software outright with a credit card the liability for the remaining balance due will show up on your financial statement as a liability. If you lease then your income statement will simply have a lease payment expense with not necessarily a liability on your balance sheet. Leasing typically will not use up your available credit lines. Banks; however, will sometimes ask about lease liability also. Conclusion: purchase your credit cards terminal terminal printer or software outright if you can easily afford it and try to negotiate the price - otherwise lease, but know the answers to the below questions before you decide on the best leasing source.
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